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EXHIBIT 99.1
FIRST UNION REAL ESTATE INVESTMENTS
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AT THE COMPANY
Brenda J. Mixson
Chief Financial Officer
(212) 905-1104
FOR IMMEDIATE RELEASE
FIRST UNION ANNOUNCES LETTER OF INTENT
FOR SIGNIFICANT ASSET SALE TO RADIANT PARTNERS
NEW YORK, NEW YORK, JUNE 21, 2000 --- FIRST UNION REAL ESTATE INVESTMENTS
(NYSE: FUR) announced today that it has signed a non-binding (except in
certain respects as noted below) letter of intent outlining the terms of a
potential transaction involving the sale (and the assumption of certain
liabilities) of a significant portion of First Union's real estate assets
(the "Purchase Assets") to Radiant Partners, LLC, which currently administers
and oversees the business and financial affairs of First Union and its
affiliates and is owned and controlled by Daniel P. Friedman, David
Schonberger, and Anne Zahner, each an executive officer of First Union. Mr.
Friedman is also a trustee of First Union.
The potential transaction outlined in the letter of intent contemplates the
sale of the Purchase Assets for approximately $205.0 million (approximately
$79.9 million in cash and approximately $125.1 million in assumed mortgage
debt). The assets to be purchased by Radiant Partners would include:
- 55 Public Square Office Building - Cleveland, Ohio
- 55 Public Square Garage - Cleveland, Ohio
- North Valley Tech Center - Thornton, Colorado
- Two Rivers Business Center - Clarksville, Tennessee
- Westgate Shopping Center - Abilene, Texas
- Pecanland Mall - Monroe, Louisiana
- Huntington Garage - Cleveland, Ohio
- Long Street Garage - Columbus, Ohio
- Madison and Wells Garage - Chicago, Illinois
- Printers Alley Garage - Nashville, Tennessee
- 5th and Marshall Garage - Richmond, Virginia,
- Club Associates' note receivable, face amount of approximately $1.5
million
- Ancillary assets including FF&E, and reserve and escrow accounts of the
Purchase Assets
- NOI from all of the Purchase Assets from June 1, 2000 less capital
expenditures committed subsequent to May 9, 2000 further reduced by
66.6% of asset management fees paid to Radiant Partners, LLC from
June 1, 2000 until the closing of the transaction
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First Union would retain ownership of the following assets:
- Unrestricted cash and Treasury bills
- Convertible preferred investment in HQ Global Workplaces
- Severance and prior trustees escrow account
- Park Plaza Mall - Little Rock, Arkansas
- Circle Tower - Indianapolis, Indiana
- Temple Mall 50% partnership interest and loan - Temple, Texas
- VenTek International, Inc.- Petaluma, California subject to 20%
contingent ownership to Radiant Partners
- Peachtree Mall legal claim
First Union will remain liable for the following obligations:
- 8.2% convertible perpetual preferred shares; $33,725,000 approximate
face amount
- 8.875% Publicly-traded senior notes; $12,500,000 approximate face amount
- Dallas management office lease
- Certain liabilities arising out of the Purchase Assets arising prior to
June 1, 2000, except for certain potential liabilities of the
Westgate Shopping Center
- Corporate expenses and liabilities not related to the Purchase Assets
- Property level mortgage debt on retained assets
- Other ordinary course liabilities
Radiant Partners would continue to manage First Union's remaining assets for
$250,000 per year. Radiant would also receive, as an additional management
fee, a 20% interest in VenTek International contingent upon First Union's
release from various performance bonds and subject to First Union Management
Inc.'s board approval. This interest will be subordinate to a $2.5 million
line of credit the Company has made available to VenTek.
The letter of intent provides that if Radiant Partners obtains a mutually
satisfactory mezzanine financing commitment of approximately $31.0 million
for the transaction by July 5, 2000, First Union will not, for a period of 45
days thereafter, solicit or initiate any competing transaction proposals.
During these 45 days, First Union and Radiant Partners expect to negotiate a
definitive purchase and sale agreement while Radiant Partners concurrently
secures equity financing. An affiliate of PaineWebber Real Estate
Securities, Inc. has indicated a willingness to negotiate and issue the
mezzanine commitment. UBS Warburg LLC and PaineWebber Incorporated are
acting as financial advisors to Radiant. Also, both PaineWebber Incorporated
and UBS Warburg LLC will serve as equity placement agents for Radiant. First
Union is being advised by Lazard Freres & Co.
The letter of intent further provides that if, after a mutually satisfactory
mezzanine commitment is obtained, First Union enters into a definitive
agreement in connection with a competing transaction proposal with respect to
at least $30.0 million of assets, First Union will reimburse Radiant Partners
for certain of its reasonable fees and expenses, subject to a cap of $750,000.
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The letter of intent is not a definitive agreement with respect to the
proposed transaction with Radiant Partners and there can be no assurance that
a definitive agreement will be successfully negotiated, that Radiant Partners
will obtain financing for the proposed transaction or that the proposed
transaction will close after execution of a definitive agreement. In
addition, the transaction will require shareholder approval.
A proforma March 31, 2000 balance sheet adjusted for this transaction as well
as events subsequent to March 31 is attached as an exhibit.
A conference call to discuss the potential transaction will be held at 11:15
a.m. Eastern Time this morning. There will be a question and answer session
moderated by Bill Ackman. All interested parties are welcome to participate
in the conference call by dialing (212) 748-2220. Please refer to the
password "First Union" conference call." There will be a taped replay of the
conference call beginning at 2:00 p.m. eastern time today through Wednesday,
June 28th at 5:00 p.m. Eastern Time. You may listen to this taped replay by
dialing (913) 385-6780 and referring to PIN number 2180.
Certain statements contained in this news release that are forward-looking
are based on current expectations that are subject to a number of
uncertainties and risks, and actual results may differ materially. The
uncertainties and risks include, but are not limited to, changes in market
activity, changes in local real estate conditions and markets, actions by
competitors, interest rate movements and general economic conditions. Further
information about these matters can be found in the information included in
the Annual Report filed by the Company with the SEC on Form 10K/A.
First Union Real Estate Equity and Mortgage Investments is a NYSE-listed
stapled-stock real estate investment trust (REIT) headquartered in New York,
New York.
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FIRST UNION REAL ESTATE EQUITY AND MORTGAGE INVESTMENTS
PRO FORMA COMBINED BALANCE SHEET AS OF MARCH 31, 2000
(IN THOUSANDS)
Park Cash
March 31, Sale of Plaza Westgate from
2000 St. Cloud Financing Financing Sale
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ASSETS
Investment in real estate
Land 53,028 (5,490)
Building and improvements 273,571 (30,126)
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326,599 (35,616)
Less - Accumulated depreciation (77,987) 14,637
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Total investment in real estate 248,612 (20,979)
Investment in joint venture 1,758
Mortgage loans and notes receivable 2,712
Other assets
Cash and cash equivalents - unrestricted 14,262 1,946 41,400 7,300 77,600 (1)
- restricted 5,031 (704)
Accounts receivable and prepayments, net
of allowances 7,886 (253)
Investments 99,579
Inventory 3,904
Unamortized debt issue costs, net 4,118 (2,409) 600 200
Other 1,304
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Total assets 389,166 (22,399) 42,000 7,500 77,600
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LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Mortgage loans 193,616 (76,243) 42,000 7,500
Notes payable 65,120
Senior notes 12,538
Accounts payable and accrued liabilities 24,039 (2,986)
Deferred items 3,817 (966)
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Total liabilities 299,130 (80,195) 42,000 7,500 -
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Shareholder's equity
Preferred shares of beneficial interest 31,737
Shares of beneficial interest 42,472
Additional paid in capital 218,167
Undistributed loss from operations (202,338) 57,796 77,600 (1)
Deferred compensation (2)
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Total shareholder's equity 90,036 57,796 - - 77,600
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Total liabilities and shareholder's
equity 389,166 (22,399) 42,000 7,500 77,600
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March 31,
Sale of Other 2000
Properties Adjustments Pro Forma
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ASSETS
Investment in real estate
Land (40,653) 6,885
Building and improvements (180,878) 62,567
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(221,531) 69,452
Less - Accumulated depreciation 56,545 (6,805)
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Total investment in real estate (164,986) 62,647 (4)
Investment in joint venture - 1,758
Mortgage loans and notes receivable (1,512) 1,200
Other assets
Cash and cash equivalents - unrestricted (2,905) (3) (35,000) (2) 104,606
- restricted (2,895) 1,432 (5)
Accounts receivable and prepayments, net
of allowances (43) 7,590
Investments - 110,000 (2) 209,579
Inventory - 3,904
Unamortized debt issue costs, net (1,571) 938
Other - 1,304
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Total assets (173,912) 75,000 394,955
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LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Mortgage loans (124,873) 42,000
Notes payable - 75,000 (2) 140,120
Senior notes - 12,538
Accounts payable and accrued liabilities - 21,053
Deferred items (2,380) 471
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Total liabilities (127,253) 75,000 216,182
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Shareholder's equity
Preferred shares of beneficial interest - 31,737
Shares of beneficial interest - 42,472
Additional paid in capital - 218,167
Undistributed loss from operations (46,659) (113,601)
Deferred compensation - (2)
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Total shareholder's equity (46,659) - 178,773
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Total liabilities and shareholder's
equity (173,912) 75,000 394,955
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1) Will receive $79.6 million from sale, assumed $2 million spent on expenses
related to sale
2) Used $35 million from Park Plaza financing and an additional $75 million in
reverse repos to purchase a $10 million investment in HQ Holdings and an
additional $100 million Treasury Bill
3) The $2.9 million consists of $2.4 million in cash for construction for the
Richmond Garage and $.5 million of proceeds from outparcel sale at Pecanland
Mall.
4) The balance consists of fixed assets at Circle Tower of $2.184 million and at
Park Plaza of $60.463 million.
5) The balance of this account consists of a severanc escrow account.